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Summary and Commentary on
Pension & Superannuation Provisions
of the 2009 Federal Budget
The Budget contains significant changes to the Age Pension provisions but the superannuation area announcements are largely limited to contribution cap reductions. It could have been considerably worse given the level of Budget deficit the Federal Treasurer faced. In brief Wayne Swan has announced:
Superannuation Contributions - annual cap has been reduced from $50,000 to $25,000 (indexed) and transitional concessional contribution cap has been halved from 2009/10 to $50,000 (unindexed). The non concessional contribution cap will become six times concessional (indexed).
Co-contribution Scheme - 100% of contributed amounts to $1000 for 2009/12, increasing to 125% for 2012/14 and returning to 150% from 2014/15.
Transition to Retirement - left in place. The advantages may not be greatly reduced since the change in status of tax on investment income backing pension remain and the reduced contribution cap will be applied against top marginal income.
Minimum Drawdown Amounts - the drawdown relief of half normal minimums will be extended into 2009-10. This will assist in ensuring self funded schemes are not forced to realise capital losses.
International Transfers - Australia and New Zealand have reached an in principle agreement for the portability of retirement monies between the two countries. Keeping the non concessional caps the same means the current QROPS transfer from the UK continues as is the case presently.
Age Pension Level - single pensioner rate will increase by $32.49 per week and pensioner couples (combined) by $10.14 per week. There will be a single fortnightly pension supplement.
Age Pension Age - this will be increased to age 67 as follows:
| Date | New Age Pension Age | Affects people born |
| 1 July 2017 | 65yrs and 6 months | 1/7/52 to 31/12/53 |
| 1 July 2019 | 66yrs | 1/1/54 to 30/6/55 |
| 1 July 2021 | 66yrs and 6 months | 1/7/55 to 31/12/56 |
| 1 July 2023 | 67 yrs | from 1/1/57 |
Changed Indexation - a new Pensioner and Beneficiary Living Cost Index (PBLCI) will be developed by ABS. Base Pension rate will be increased by greater of CPI or PBLCI.
Work Bonus - the Pension Bonus Scheme closed to new entrants from 20 Sept 2009. Workforce participation encouraged by including only half of the first $500 of fortnightly employment income in the income test.
We will be updating our website and calculators shortly to take these changes into account.
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